Power Rental Op Co. v. V.I. Water & Power Auth.

548 F.Supp.3d 1193

POWER RENTAL OP CO., LLC, Plaintiff,

v.VIRGIN ISLANDS WATER & POWER AUTHORITY, Defendant.

Case No. 3:20-cv-1015-TJC-JRK

United States District Court, M.D. Florida, Jacksonville Division.

Signed July 6, 2021

Aleksey Shtivelman, Harold E. Patricoff, Ana Rosa Portal Mendez, Shutts & Bowen, LLP, George G. Mahfood, Ryan Todd, Nelson Mullins Broad and Cassel, Miami, FL, John A. Carlisle, Ryan J. Mittauer, Rutledge Richardson Liles, The Liles Firm, P.A., Jacksonville, FL, for Plaintiff.

Anna G. Dimon, Pro Hac Vice, Edmund M. O'Toole, Pro Hac Vice, Venable LLP, New York, NY, Daniel M. Mahfood, Frank Edward Morreale, Holland & Knight LLP, Jacksonville, FL, for Defendant.

ORDER

TIMOTHY J. CORRIGAN, United States District Judge

This breach of promissory note case comes before the Court upon Plaintiff Power Rental Op Co's ("OpCo") Motion for Summary Judgment (Doc. 73), to which Defendant Virgin Islands Water & Power Authority ("WAPA") has responded (Doc. 83). OpCo has also filed a reply (Doc. 88).

I. FACTS

A. WAPA and OpCo's Business Relationship

OpCo is a Florida limited liability company with its principal place of business and headquarters in Florida. Docs. 6 at ¶ 2; 66 ¶ 2. WAPA is a municipal corporation existing under the laws of the United States Virgin Islands ("USVI") with a mandate to provide water and power to residential and commercial customers in the USVI. Docs. 20-1 ¶ 2; 6 at ¶ 3. WAPA does not have offices or employees in Florida. Doc. 20-1 at ¶¶ 3–6. WAPA also does not provide services in Florida. Id. ¶¶ 2, 4.

On February 15, 2012, General Electric International ("GE") entered into a contract (the "Rental Agreement") with WAPA for the provision of water and energy-related services and rental of power generation equipment and water treatment systems. See Docs. 6-2; 6 at ¶ 7; 66 ¶ 7. In exchange for the equipment and services, WAPA was required to make monthly payments. Docs. 6 at ¶ 8; 66 ¶ 8.

In 2013, due to an acquisition of GE businesses, OpCo assumed ownership of the Rental Agreement. Docs. 6 at ¶ 9; 74 ¶ 3. Between 2013 and 2019, OpCo and WAPA made numerous modifications to the Rental Agreement. See Docs. 34-1 ¶¶ 7, 11–12; 6-3 at 2. Via thirteen change orders, the parties, among other changes, modified the contract price and the monthly payment rate, extended the rental term, and added a new provision on environmental compliance and indemnification to the Rental Agreement. See Docs. 6-3 at 4, 7, 9–10, 14, 24; 73-1 at 1. The change orders also memorialize WAPA's agreement to rent additional power plant equipment and purchase additional services from OpCo. See Docs. 6-3 at 4, 7, 9–10, 14, 24; 73-1 at 1. The modifications to the Rental Agreement were primarily made at WAPA's request and pursuant to telephone negotiations between USVI-based WAPA representatives and Florida-based OpCo representatives. See Docs. 34-1 ¶¶ 7, 11–12; 6-3 at 2. Over the course of OpCo and WAPA's business relationship, WAPA transmitted service requests for equipment maintenance, customer support, and replacement parts to Florida-based OpCo employees. Doc. 34-1 ¶ 17.

Eventually, WAPA stopped making the monthly payments required under the Rental Agreement; thus, on April 30, 2019, the amount owed by WAPA under the Rental Agreement was $14,291,986.00. See Docs. 6 ¶¶ 12; 73-1 at 2. OpCo subsequently agreed to a reduction of the outstanding balance to $9,310,971 in exchange for WAPA issuing a promissory note (the "Note") to OpCo for the agreed reduced amount. Docs. 73-1 at 2; 6 ¶¶ 13, 17; 66 ¶¶ 13, 17; see also Doc. 74 ¶ 14 ("Neither WAPA nor OpCo modified or otherwise amended the Note in writing subsequent to the execution of the Note."). The Note is governed by New York substantive law, and its terms required WAPA to pay OpCo in twenty equal monthly installments of $507,354.00 until the Maturity Date of December 1, 2020 (a total of $9,310,971.00 plus interest). See Docs. 73-1 at 3, 6; 74 ¶ 13; 6 ¶ 17; 66 ¶ 17. Under the Note, WAPA also agreed to pay ten percent interest per annum on the outstanding principal amount until the principal was paid in full. See Doc. 73-1 at 3.

The Note stipulates that WAPA's failure to make a payment within five business days following written notice of nonpayment by OpCo constitutes a default event. See Doc. 73-1 at 4. The Note further specifies:

Upon the occurrence of [a default event], all then outstanding principal and accrued interest hereunder shall, at the sole selection of [OpCo], become immediately due and payable in full .... Interest shall accrue, and shall be payable on demand, on the outstanding principal balance of this Note from and after the date of any [default event] ... at a rate equal to three percent ... per annum in excess of the interest rate otherwise applicable at the time of such default.

Doc. 73-1 at 4–5. The Note also contains a clause on waiver of immunities and a clause on waiver of defenses that states "[w]ith respect to the Agreed Contract Arrearage, [WAPA] waives any defenses, right of set off or any other claim [WAPA] has or may have against [OpCo]." Id. at 4–5.

B. WAPA's Failure to Make Payments Under the Note

WAPA made six of the twenty monthly payments required under the Note. Docs. 74 ¶ 15; 6 ¶ 19; 66 ¶ 19. On February 6, 2020, OpCo mailed WAPA a notice, stating that WAPA had failed to make its January 2020 payment and that WAPA had "five business days to cure the default." Doc. 6-4 at 2. On February 27, 2020, OpCo mailed WAPA a notice, explaining that WAPA was in default under the Note and demanding immediate payment of the Note's outstanding principal and accrued interest. See Docs. 6-4 at 3; 6 ¶ 21; 66 ¶ 21.¹ In June 2020, OpCo filed suit in Florida state court alleging three counts for breach of promissory note (Count I), services rendered (Count II), and quantum meruit (Count III). Doc. 1-1. Subsequently, WAPA removed the case to this Court. Docs. 1, 6. OpCo seeks recovery of $5,393,521.81, plus interest, fees, and costs. Doc. 73 at 4.

II. DISCUSSION

A. WAPA's Jurisdictional Challenge

A federal court sitting in Florida may properly exercise personal jurisdiction only if the requirements of (1) Florida's long-arm statute; and (2) the Due Process Clause of the Fourteenth Amendment to the United States Constitution are both satisfied. See Story v. Heartland Payment Sys., LLC, 461 F. Supp. 3d 1216, 1225 (M.D. Fla. 2020) (citing United Techs. Corp. v. Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009) ); Fed. R. Civ. P. 4(k)(2).

WAPA seeks to reargue issues addressed at the November 24, 2020 hearing (Doc. 57) and in the Court's November 30, 2020 Order (Doc. 55) denying WAPA's motion to dismiss for lack of personal jurisdiction. WAPA asserts that "[t]he parties’ divergent views on facts bearing on this Court's exercise of personal jurisdiction constitute a genuine issue of material fact." Doc. 83 at 7. However, the Court maintains that it may exercise jurisdiction over WAPA and expounds on its position below.

1. The Court has specific jurisdiction under the breach-of-contract provision of the Florida long-arm statute.

The Florida long-arm statute confers personal jurisdiction over a defendant who "[b]reach[es] a contract in this state by failing to perform acts required by the contract to be performed in this state." FLA. STAT . § 48.193(1)(a)(7) ; see also RG Golf Warehouse, Inc. v. Golf Warehouse., 362 F. Supp. 3d 1226, 1238 (M.D. Fla. 2019) ("Failure to make payments owed under a contract where payment is due to be made in Florida is sufficient to satisfy Section (1)(a)(7) of Florida's long-arm statute.") (internal quotation marks omitted). Here, WAPA breached the Note by failing to make payments to OpCo. See Docs. 6 ¶ 19; 66 ¶ 19; 74 ¶ 15. With respect to the place of payment, the Note stipulates that WAPA "hereby promises to pay to the order of [OpCo] at 3600 Port Jacksonville Parkway, Jacksonville, Florida" the principal sum plus interest, and that WAPA was to make the payments via wire transfer to OpCo's New York bank account. See Doc. 73-1 at 3. Note payment invoices sent to WAPA by OpCo also state that balances were payable to OpCo through its New York bank account. See Doc. 34-1 at ¶¶ 14–15.

WAPA asserts that since it only wired payments to the New York bank, payment was due and made in New York, not Florida.

See Docs. 20 at 5; 20-1 ¶ 11. However, as the Court indicated at the motion to dismiss stage, WAPA's reasoning is flawed. WAPA's debt is owed to OpCo, a Florida limited liability company with its headquarters and principal place of business in Florida, and the New York account to which the Note required WAPA to wire payments did not have an existence independent of OpCo's Florida headquarters, which managed, accessed, and maintained the account. Doc. 34-1 ¶ 10. Accordingly, payment under the Note was due in Florida, not New York.

2. The Court's exercise of jurisdiction comports with the Due Process Clause of the Fourteenth Amendment.

The Eleventh Circuit employs a three-part test to determine whether exercising specific jurisdiction comports with due process (or whether there are sufficient "minimum contacts"), examining:

(1) whether the plaintiff's claims arise out of or relate to at least one of the defendant's contacts with the forum; (2) whether the nonresident defendant purposefully availed himself of the privilege of conducting activities within the forum state, thus invoking the benefit of the forum state's laws; and (3) whether the exercise of personal jurisdiction comports with traditional notions of fair play and substantial justice.

Dean v. Easterling, No. 3:19-cv-566-J-32JRK, 2020 WL 1665482, at *5 (M.D. Fla. Apr. 3, 2020) (citing Louis Vuitton Malletier, S.A. v. Mosseri, 736 F.3d 1339, 1355 (11th Cir. 2013) ). "[W]hen inspecting a contractual relationship for minimum contacts, [the Eleventh Circuit] follow[s] a ‘highly realistic approach’ that focuses on the substance of the transaction: prior negotiations, contemplated future consequences,...